I personally feel that being charged £25 for going overdrawn by 2 pence is mighty excessive but I can see why the ruling went in the banks' favour as it's all about the small print and the customer agreeing to it.
It'll be an interesting one to watch - I doubt this is the end of it!
On one hand, while some bank charges ARE unfair (and are clearly punitive and advantage-taking in my view), it would only really be feasible (or fair) to apply any new rule going forwards - I think it's a bit crazy asking banks to repay everything over an indefinite period of time!
The consumer action group are already planning their next steps in fighting the ruling.
I personally agree with the decision; if you sign a contract it is up to you to read the small print. Yes, the charges are high compared to what you could be overdrawn by and yes the banks could refuse a direct debit rather than allowing you to go overdrawn (but then the consumer or business would moan about that) but it is what it is.
It will be interesting to see if there is a bank out there brave enough to go after more market share by changing its policy to drop charges.
This probably is not the end of this battle. But, I am going to be controversial. I am glad the banks thus far do not have to blanket refund charges.
This kind of intervention in big business issues rarely works out in the consumer interest. Should the banks be forced to give back millions of pounds, as businesses they would seek to recoup that. Which would mean a big shake up in the way they charge.
Of course, if you feel banks have over charged (and they often do), take it up with your bank. And before you use your bank's services, such as over drafts, be clear on the terms up front. But getting big brother to refund charges like this would, in the long term, have not benefitted the consumer.
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Paul Norman - OrangeTree Development
Whether you think the charges are excessive or not when you signed on the dotted line you agreed to them.
Also the day they scrub bank charges across the bored is the day you start paying £9.99 a month for an account.
Both valid points. Look at other places in Europe where the 'free bank account' is more myth than legend - Spain for example.
I do think some of the charges are excessive. However - I think I said before, this is also intentional - before the mass cries of "profiteering!" - I would add further that this was probably (originally) to make them punitive in nature. Perception is more than half the battle
Theres also more to it than just "the charges" - e.g when business was rubbish at the start of the year, Lloyds were *phenomenally* helpful when I talked to them about my finances - and even cancelled a load of charges I was due to pay because I'd messed up some payments, etc. If anything, in my experience, they've tried not to charge me when things have gone wrong!
It will definitely be very interesting to see which bank will be first to spin this around into a marketing opportunity, though..!
Theres also more to it than just \"the charges\" - e.g when business was rubbish at the start of the year, Lloyds were *phenomenally* helpful when I talked to them about my finances - and even cancelled a load of charges I was due to pay because I'd messed up some payments, etc. If anything, in my experience, they've tried not to charge me when things have gone wrong!
That's the key point to remember with most banks. They do have the power to cancel the charges. And any good Advisor/Manager will do so if they can see it will benefit the customer.
I think we will now see a proliferation of claims going to the small claims court once again. The bank charges argument has seen one route closed off, but there are others available.
bank charges are an odd one - there has to be a deterrent to people treating their finances, and the banks' services, whimsically; BUT the banks have behaved questinoably themselves.
Payment Protection Insurance is the real banking scandal here, with the banks making over £3 billion a year from these policies.
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What really bugs me about bank charges, is if you requested a formal overdraft limit at the level you know is going to be requested via Direct Debit, they may decline you. Yet when the Direct Debit comes in they accept the informal request, and levy you with a £25 charge for the fun of it.
This in my opinion is not fair practise, as they have said you are unworthy of an overdraft of for example £100, yet when there is a request for £94 they grant an informal overdraft and bounce you a £25 charge onto the account, effectively granting you £119 debt. Despite the fact you were responsible and requested a limit which would prevent this missed direct debit.
yes the banks could refuse a direct debit rather than allowing you to go overdrawn (but then the consumer or business would moan about that) but it is what it is.
They still apply penalty charges even when they refuse a DD due to insufficient funds etc.
Last year I changed my car insurance provider and there was some confusion (on my part) regarding the first monthly payment date, I went to my local RBS branch twice and personally transferred the funds from my business account to my personal account, not reallising my mistake. This resulted in the first DD being requested and refused twice, and being subject to a £38.00 penalty charge each time,
I knew nothing about this until I received a letter from my insurers, I called my bank and was told the £76.00 (2x £38.00) charges were to cover two letters sent to my insurers (which they never received) informing them of the lack of funds in my account, I suggested that if the teller had informed me there was a problem with my account when i was in the bank transferring the cash, I could have sorted it immediately, I was then advised that it wasn't the banks duty to inform their customers of such problems, they also refused to refund the £78.00 (non) service charges as apparently I had a penalty charge refunded two years! previously.
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So, bank charges are legal...
